Correlation Between AB Volvo and Serstech
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Serstech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AB Volvo and Serstech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Serstech AB, you can compare the effects of market volatilities on AB Volvo and Serstech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AB Volvo with a short position of Serstech. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Serstech.
Diversification Opportunities for AB Volvo and Serstech
Excellent diversification
The 3 months correlation between VOLV-A and Serstech is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Serstech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serstech AB and AB Volvo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AB Volvo are associated (or correlated) with Serstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serstech AB has no effect on the direction of AB Volvo i.e., AB Volvo and Serstech go up and down completely randomly.
Pair Corralation between AB Volvo and Serstech
Assuming the 90 days trading horizon AB Volvo is expected to generate 5.5 times less return on investment than Serstech. But when comparing it to its historical volatility, AB Volvo is 4.2 times less risky than Serstech. It trades about 0.06 of its potential returns per unit of risk. Serstech AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Serstech AB on August 30, 2024 and sell it today you would earn a total of 86.00 from holding Serstech AB or generate 296.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Serstech AB
Performance |
| Timeline |
| AB Volvo |
| Serstech AB |
AB Volvo and Serstech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Serstech
The main advantage of trading using opposite AB Volvo and Serstech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Serstech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Serstech will offset losses from the drop in Serstech's long position.| AB Volvo vs. Investor AB ser | AB Volvo vs. Sandvik AB | AB Volvo vs. Svenska Handelsbanken AB | AB Volvo vs. Atlas Copco AB |
| Serstech vs. Enzymatica publ AB | Serstech vs. Polygiene AB | Serstech vs. Sprint Bioscience AB | Serstech vs. XMReality AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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